Global Demand, Fluctuating Commodity Prices Worry US Farmers

The United States is the leading producer of corn and soybeans
worldwide. According to a study conducted by the University of
Illinois, U.S. farmers will spend roughly thirty percent more this year
to plant those crops. This comes as demand from countries that import
food is slowing. U.S. farmers are bracing for an uncertain year.

It's
just after 6 a.m., a typical start to a day in the life of Brent
Scholl, an Illinois farmer running a 100-year-old family business.

His
first chore is rounding up pigs to send them to the slaughterhouse.
Each pig translates into dollars that Scholl will spend on equipment,
more pigs, his farm, and his family.

"You spend a lot of
dollars, you take in a lot of dollars but you don't keep a lot of
dollars, but dollars flow always," said Scholl.

For the last
several months, more dollars have been flowing away from Scholl's
farm. Though none of his pigs are infected, concerns about the A-H1N1
virus known as swine flu have cut demand for pork and that has affected
Scholl's profits.

But Scholl is not just a hog farmer. His
next chore is loading the planters with corn and soybean seed before
heading to the fields.

It's late in the planting season after an unusually wet spring, and the clock is ticking to get crops planted.

Because
of the wet spring, the U.S. Department of Agriculture anticipates a
tight supply of corn and soybeans in the fall, which could boost
prices. For Scholl, that good news is overshadowed by the increased
costs associated with growing his crops.

"We are at record high
on what the fertilizer was going to be. I think next year it's going
to be a lot less but we still have to work through the fertilizer that
was in the pipeline from last year yet," he said.

There is also
the lingering fear of how the global economic downturn will affect
prices when the crops are ready for sale in the fall.

"This
recession is a bit different than other ones," said Gary Schnitkey, a
professor of farm management at the University of Illinois in Urbana. "One
of the big things that have happened this time that's different from
the previous times is the amount of volatility that's out there as far
as prices."

In 2008, a World Bank study attributed the growing demand for biofuel as the leading factor in the rise in food prices.

That
helped U.S. farmers last year, when prices for corn and soybeans
reached an all time high. But this year, with the cost of petroleum
down, the demand for biofuels has declined.

So has the global demand for food, particularly in countries such as China and India.

"With
those fears of recession and depression worldwide, that would reduce
income levels in China and India, which would reduce demand for food
products," said Schnitkey.

Regardless, Brent Scholl still needs to make money and feed his family. Despite the grim outlook, he is upbeat.

"It
does test your strength in God and religion and where all that is at
times, like any good job will do that," he said. "You rely on family
and you rely on friends and hopefully your knowledge that you are smart
enough to figure it out some days."

Scholl says with his
children on their way to college, he isn't sure if farming will be
attractive enough to keep the farm in the family for future
generations. But because of the sluggish job market, farming may be
one of the few jobs available when his children enter the work force.